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Investing.com - Truist Securities has reiterated a Buy rating on Genmab A/S (NASDAQ:GMAB) with a price target of $46.00 following the company's $8 billion bid for Merus. The company, currently valued at $17.7 billion, demonstrates excellent financial health according to InvestingPro data, with impressive gross profit margins of 94.5% and strong revenue growth of 33% over the last twelve months.
The research firm views Genmab's offer for Merus (NASDAQ:MRUS) as a favorable deal for what it considers a best-in-class asset. Truist Securities has changed its rating on Merus to Hold following the announcement.
According to Truist Securities' analysis, the $8 billion price primarily reflects the value of Merus' Peto drug candidate in head and neck cancer, which the firm models as a greater than $2.5 billion opportunity without risk adjustment.
The firm notes it is not discounting Peto's potential in colorectal cancer (CRC), despite acknowledging this indication may have a longer and more complex development path. Truist Securities points out there is stronger mechanistic validation for LGR5 in this indication.
Upcoming colorectal cancer data for Peto could provide insights into the development requirements for this indication, potentially offering additional value beyond what's reflected in the acquisition price.
In other recent news, Genmab A/S announced its intention to acquire Merus for $97 per share, amounting to an approximately $8 billion cash deal. This acquisition has prompted several analysts to adjust their price targets for Genmab. TD Cowen raised its price target to $32 while maintaining a Hold rating, and Leerink Partners increased its target to $34, maintaining an Outperform rating. H.C. Wainwright also adjusted its price target for Genmab, raising it to $36 and maintaining a Buy rating. Additionally, Genmab reported promising results from its Phase 2 EPCORE NHL-6 trial, where 92% of patients with relapsed or refractory diffuse large B-cell lymphoma successfully received their first full dose of epcoritamab in an outpatient setting. The company also announced a slight increase in its share capital by 0.01% through the exercise of employee warrants. This capital increase involves the issuance of 4,563 new shares, which will be subscribed in cash at varying prices. These developments reflect Genmab's ongoing strategic moves and research progress.
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